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Introduction: Payment terms of 2/10, n/30 means, pay the bill amount within 10 days and avail a discount of 2%. Else, the entire amount has to be paid within 30 days.
Payment terms of 1/10, n/60 means, pay the bill amount within 10 days and avail a discount of 1%. Else, the entire amount has to be paid within 60 days.
Given: Some of the transactions of T Company during August are listed in the question. T Company uses the periodic inventory method.
(a1)
To prepare: To prepare general
(a2)
To describe: To describe how the various items would be shown in the financial statements, assuming that purchases are recorded at gross amounts and that discounts are to be recorded when taken.
(b1)
To prepare: To prepare the general journal entries for the transactions, assuming that purchases are recorded at net amounts and that discounts lost are treated as financial expenses.
(b2)
To prepare: To prepare the
(b3)
To describe: To describe how the various items would be shown in the financial statements, assuming that purchases are recorded at net amounts and that discounts lost are treated as financial expenses.
(c)
To state: To determine to state which of the two methods do you prefer and why.
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Chapter 8 Solutions
Intermediate Accounting
- Globex Corp. has forecasted sales of $30.0 million for next year and expects its cost of goods sold (COGS) to remain at 80% of sales. Currently, the firm holds $2.8 million in inventories, $2.3 million in accounts receivable, and $2.4 million in accounts payable. (Use 365 days are the length of a year in all calculations.) a. Approximately how long does it currently take Globex Corp. to convert raw materials to its finished products and then to sell them? b. On average, how long does it take from the time a sale is made until the time cash is collected from customers? c. Globex Corp. relies on customer credit when it buys raw materials from its suppliers. How long does it take after the firm purchases materials before it sends cash to its suppliers? d. What is the length of Globex Corp.'s cash conversion cycle (CCC)?arrow_forwardSam sold land to Brenda. The sales price was $200,000. Sam paid a commission to a real estate broker of $12,000 and paid other selling expenses of $2,425. Sam's basis in the land was $116,750. What was Sam's gain realized on the sale of the land?arrow_forwardHii tutor give me Answerarrow_forward
- Hello tutor please solve this questionarrow_forwardUsing the following data: Actual direct labor-hours worked Standard direct labor rate Labor efficiency variance 6,100 hours $10 per hour $2,000 Unfavorable The standard hours allowed for December's production isarrow_forwardPlease help me this question solution general accountingarrow_forward
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